2020 (2) TMI 297 - HC - VAT and Sales Tax

Withholding the refund of excess amount - time limitation for completion of assessment is expired - Section 39 of the VAT Act, 2003 - HELD THAT - In the absence of any assessment for the year 2011-2012 and more particularly, when the time period for completion of assessment is over as prescribed under the provisions of Section 34(9) and 34(10) of the Act, 2003, the respondents are not entitled to withhold the refund. Reliance placed by the respondents on subsection (8A) of Section 34 is also misplaced in the facts of the case as sub-section 8A of section 34 is applicable only when, if the prescribed authority is satisfied that the tax has been evaded etc. In the facts of the case, no notice has been issued till date by the respondent authority invoking provisions of Section 8(A)(a) of Section 34 of the VAT Act, 2003 - Therefore, in contemplation of invoking such provision for assessment without there being any satisfaction of the prescribed authority that the tax has been evaded etc. by the petitioner, the refund cannot be withheld. The respondents are directed to pay to the petitioner amount of ₹ 63,843/- together with 6% interest forthwith and latest by 31st January 2020 - petition allowed.

Summary

Issues:
Refund of excess payment under VAT Act, 2003 for assessment years 2011-2012 and 2012-2013.

Analysis:
1. Refund Claim for Excess Payment: The petitioner sought a writ of mandamus for refund of ?63,843 with interest, deposited for tax, penalty, and interest for assessment years 2011-2012 and 2012-2013. The petitioner contended that despite depositing the amount, no assessment order was passed for 2011-2012, and thus, the refund was due.

2. Legal Provisions: The petitioner relied on Section 34(2) of the VAT Act, 2003, stating the time limit for passing assessments. The court observed that no assessment order was issued for 2011-2012 within the prescribed time frame. Section 36 of the Act allows for refund of excess payments, emphasizing that the Commissioner must refund any amount paid in excess of the due amount.

3. Withholding Refund: The respondents argued that a proper assessment under Section 34(8) was pending, justifying the withholding of the refund. However, the court found no valid reason for withholding the refund as the assessment for 2011-2012 was not completed within the statutory time limit.

4. Judicial Intervention: The court criticized the bureaucratic approach of the respondents in withholding the refund, stating that citizens should not be compelled to approach the court for legitimate refunds. The judgment directed the respondents to refund the amount of ?63,843 with 6% interest by a specified date, emphasizing the importance of timely and rightful refunds to taxpayers.

5. Conclusion: The court allowed the petition, ordering the respondents to pay the petitioner the withheld amount with interest. The judgment highlighted the necessity for adherence to statutory timelines for assessments and prompt refund of excess payments to taxpayers, emphasizing the importance of efficient and citizen-friendly governance practices.